Webb Company has outstanding a 7% annual, 10-year, $100,000 face value bond that it had issued several

Question:

Webb Company has outstanding a 7% annual, 10-year, $100,000 bond that it had issued several years ago. It originally sold the bond to yield 6% annual interest. Webb uses the effective interest rate method to amortize the bond premium. On June 30, 2014, the outstanding bond’s carrying amount was $105,000.

Required:
What amount of unamortized premium on the bond should Webb report in its June 30, 2015, balance sheet?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...